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Treasury loans additional $3.8B to GMAC

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Washington -- The U.S. Treasury Department announced a new loan to struggling automotive financial firm GMAC, bringing federal ownership of the company to 56 percent.

The financial firm will have its Troubled Asset Relief Program loans increased by $3.8 billion, giving it a total of $16.3 billion, more than has been given to Chrysler, one of its chief affiliates, The New York Times reported Wednesday.

The Treasury said $2.54 billion of the latest round of loans would be converted to preferred securities, while $1.25 billion would be used to purchase preferred stock in the company that could not secure private funding to overcome losses in its mortgage lending business.

The Treasury said the loans complete a pledge of additional loans made to the company in May and that the funding "protects taxpayers to the greatest extent possible."

In stress tests conducted earlier this year, the Treasury ranked GMAC as among the weaker firms financially that had been allocated TARP funding. Earlier funding did not end the firm's problems, as it lost $5.3 billion January through September, the Times said.

Copyright 2009 by United Press International.

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